After Participating In The Arbitral Proceedings Without Any Protest, Can't Object To Jurisdiction Later : MP High Court

The bench of Justice S.A. Dharmadhikari held that an issue as to non-jurisdiction of the private arbitrator when the Madhyastham Adhikaran Adhiniyam, 1983 Act provides for statutory arbitration for 'works contract' cannot be raised for the first time in an appeal and has to be taken at the earliest possible opportunity.

Facts

Pursuant to a notice inviting tender by the appellant, respondent submitted its bid which was accepted by the appellant, consequently, the parties entered into a work order dated 04.04.2005. There was a delay in the completion of the project work that led to the termination of the agreement by the appellant that gave rise to a dispute arose between the parties. Consequently, the respondent invoked the arbitration clause and registered a case with the arbitration tribunal provided under the Act, however, the tribunal returned the case on the ground that the parties have an independent arbitration agreement and directed the parties to approach the High Court for the appointment of the arbitrator.

Accordingly, the respondent approached the High Court for the appointment of the arbitrator. The Court appointed the arbitrator. The arbitrator awarded a sum in favour of the respondent. Aggrieved by the award, the appellant unsuccessfully challenged it under Section 34 of the Act.

Grounds of Challenge

The appellant challenged the award on the following grounds:

• The award is passed without jurisdiction, therefore, the same is liable to be set aside as being against the public policy of India.
• The contract between the parties is a 'works contract' and the act provides that only the tribunal constituted therein can adjudicate a dispute arising out of a 'works contract', therefore, the tribunal did not have the jurisdiction.

The respondent raised the following objections:

• The objection regarding the non-jurisdiction is to be raised at the earliest opportunity, however, the appellant has raised it for the first time at the belated stage of appeal, therefore, the objection must be rejected.
• The appellant has never before the arbitral tribunal raised any issue of non-jurisdiction.
• The appellant has also not challenged the order of the arbitral tribunal constituted under the act that had returned the case of the parties with a direction for the parties to approach the High Court for the appointment of the arbitrator.
• The appellant has also never challenged the order of the High Court appointing the arbitrator for the adjudication of dispute between the parties.

Analysis by the Court

The Court has that a party which has participated in the arbitration proceedings without any protest or challenge as to the jurisdiction of the tribunal cannot for the first time challenge the jurisdiction of the tribunal under Section 37 of the A&C Act.

The Court observed that the appellant has never ever raised the issue of non-jurisdiction either before the arbitral tribunal or before the Court. It also observed that the appellant has never challenged the decision of the High Court in appointing the arbitrator nor the decision of the arbitral tribunal provided under the special act which had returned the parties application on the ground that the dispute can be settled under the A&C Act as the parties have an independent arbitration agreement.

The Court held that an issue as to non-jurisdiction of the private arbitrator when the Madhyastham Adhikaran Adhiniyam, 1983 Act provides for statutory arbitration for 'works contract' cannot be raised for the first time in an appeal and has to be taken at the earliest possible opportunity.

The Court also observed if no objection to the jurisdiction of the arbitration was taken at the relevant stage, the award may not be annulled only on that ground.

Accordingly, the Court dismissed the appeal.

Case Title: State of Madhya Pradesh v. Nathuram Yadav, Arbitration Appeal No. 11 of 2017

Case citation: 2022 LiveLaw (MP) 281

Counsel for the Appellant: Ashish Anand Bernard, Additional Advocate General with Ritwik Parashar.

Counsel for the Respondent: Siddharth Kumar Jain.

Click Here To Read/Download Order